On July 27, Sony (NYSE:SNE) released second-quarter earnings for the period ended June 30. Numbers below are Japanese yen year-over-year comparisons.

  • Local currency sales grew 11.2% year over year, and both operating and net income turned into profits from year-ago losses.
  • Margins improved considerably and passed into the black across the board. While margins remain slim, it's an encouraging sign.
  • Free cash flow continues to be a money pit for Sony, and inventory is building up for the upcoming PlayStation 3 launch. Positive margins are nice, but positive cash flow would be even better.

(Figures in billions of yen, except per-share data)

Income Statement Highlights

Avg. Est.

Q2 2006

Q2 2005

Change

Sales

--

Y1,744

Y1,568

11.2%

Net profit

Y15.5

Y32.3

(Y7.3)

NM

EPS

Y15.48

Y32.25

(Y8.68)

NM

Diluted shares

Y14.76

Y30.75

(Y8.68)

NM



Get back to basics with a look at the income statement.

Margin Checkup

Q2 2006

Q2 2005

Change*

Gross margin

30.5%

30.04%

0.46%

Operating margin

1.55%

(0.42%)

1.97%

Net margin

1.85%

(0.46%)

2.31%

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q2 2006

Q2 2005

Change

Cash + ST invest.

Y1,022

Y988

3.44%

Accounts receivable

Y986

Y939

5.01%

Inventory

Y948

Y702

35%



Liabilities

Q2 2006

Q2 2005

Change

Accounts Payable

Y762

Y666

14.41%

Long-Term Debt

Y868

Y678

28.02%



Learn the ways of the balance sheet.

Cash Flow Highlights

YTD 2006

YTD 2005

Change

Cash From Ops.

(Y98.0)

(Y88.6)

(10.61%)

Capital expenditures

Y125.7

Y106.8

17.7%

Free cash flow

(Y223.7)

(Y195.4)

(14.48%)



Find out why Fools always follow the money.

Related companies:

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  • NEC (NASDAQ:NIPNY)
  • Matsushita Electric Industrial (NYSE:MC)
  • Viacom (NYSE:VIA)

Related Foolishness:

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